By Kate Davidson and Andrew Restuccia
WASHINGTON -- President Trump's $4.8 trillion budget charts a
path for a potential second term, calling for steep reductions in
social safety-net programs and higher outlays for defense and the
space program, while assuming tax cuts will be extended.
The plan, released on Monday, would increase defense spending
0.3%, to $740.5 billion for fiscal year 2021, which begins Oct. 1.
It would lower nondefense spending by 5%, to $590 billion, below
the level Congress and Mr. Trump agreed to in a two-year budget
deal last summer.
A White House budget reflects an administration's priorities in
spending negotiations for the next fiscal year. This year, the
budget proposal also highlights Mr. Trump's fiscal policy
objectives should he be re-elected, and his campaign messaging will
likely reflect it.
The proposal is unlikely to become law, as Democrats control the
House and spending bills in the GOP-led Senate need bipartisan
support. Budget analysts expect lawmakers to punt final decisions
on 2021 spending until after the November presidential election,
and instead fund the government with temporary spending measures
for the first few months of the fiscal year.
Democrats signaled their opposition to the Republican
administration's budget plan, which House Speaker Nancy Pelosi (D.,
Calif.) said would "inflict devastating cuts to critical lifelines
that millions of Americans rely on."
"The budget is a statement of values, and once again the
president is showing just how little he values the good health,
financial security and well-being of hard-working American
families," Mrs. Pelosi said.
Republican lawmakers were noncommittal. "Presidents' budgets are
a reflection of administration priorities, but in the end, they are
just a list of suggestions," said Sen. Mike Enzi (R., Wyo.)
chairman of the Senate Budget Committee. "Bipartisan consensus will
be necessary to bring our debt and deficits under control."
Russell Vought, the acting director of the White House Office of
Management and Budget, acknowledged that Congress has ignored Mr.
Trump's budget proposals in the past. "We're going to keep
proposing these types of budgets in hope that at some point
Congress will have some sense of fiscal sanity and join us in
trying to tackle our debt and deficit," he said at a briefing with
reporters Monday.
NASA would see a 12% increase next year, as Mr. Trump seeks to
fulfill his goal of returning astronauts to the moon by 2024. The
budget of the Department of Veterans Affairs would rise 13% next
year, and the Department of Homeland Security's 3%. The National
Nuclear Security Administration's budget would get a 19% boost.
The plan requests $2 billion in new funding for construction of
the wall on the southern U.S. border -- Mr. Trump's signature 2016
campaign promise that sparked fights with Democrats, leading the
president to trigger a historic five-week government shutdown last
winter after lawmakers refused to fund the project. The latest $2
billion request is less than the $5 billion the administration
sought last year.
The administration is also asking for more Immigration and
Customs Enforcement detention space than ever before: it requests
$3.1 billion to build up a detention capacity of about 60,000 beds.
Currently, ICE can house a little more than 40,000 detainees a
day.
Meanwhile, the administration recommended the Environmental
Protection Agency's spending be slashed by 26%.
All told, the White House proposes to cut spending by $4.4
trillion over a decade. Of that, it targets $2 trillion in savings
from mandatory spending programs, including $130 billion from
changes to Medicare prescription-drug pricing, $292 billion from
safety-net cuts -- such as work requirements for Medicaid and food
stamps -- and $70 billion from tightening eligibility access to
disability benefits.
The budget would lower future spending from where it would be
under current policy. A senior administration official said
government spending will continue to rise, but not as much as it
would under current policy.
In campaigning for the White House Mr. Trump had promised voters
he would protect funding for Medicare and Medicaid. His new
budget's proposals to wring savings through changes to those
programs reflect longstanding GOP efforts to reduce federal
safety-net spending, and come the week after all but one Republican
senator voted to acquit the Mr. Trump of impeachment charges passed
by House Democrats.
The budget plan assumes the $1.5 trillion tax-cut package
enacted in 2017 and set to expire by 2025, will be extended, and
projects revenue in line with last year's proposal.
It also expects economic growth will be faster than most
economists predict if Mr. Trump's policies are implemented. After a
brief pickup in 2018, growth last year settled back to the roughly
2% pace that has prevailed during the decade since the recession
ended, where many economists expect it to remain.
The White House projects the economy will grow 3.1% in the
fourth quarter of 2020, compared with a year earlier, and 3% in
2021, and that it will continue to expand at that pace for the rest
of the decade. But the administration expects year-over-year growth
-- comparing total GDP for the year -- to be slightly lower in 2020
than it forecasted last year, the senior administration official
said.
The administration forecasts the federal budget deficit would
shrink to $966 billion next year from an estimated $1 trillion in
2020, but it would be more than twice what Mr. Trump projected in
his first budget proposal in 2017.
Total deficits over the next decade would shrink $4.6 trillion
under the plan, and annual deficits would be eliminated by 2035,
the administration says. During his 2016 campaign, Mr. Trump
discussed paying off the federal debt within eight years.
Although Trump budget officials have pushed for spending cuts to
reduce deficits, the president has reached two agreements with
Congress to boost spending above limits set in 2011.
Meanwhile, tax cuts enacted by Republicans in 2017 have reduced
government revenue as a share of economic output, pushing deficits
as a share of GDP to 4.7%, well above the 2.7% average over the
past 50 years.
The administration forecasts the 10-year Treasury yield, which
reflects the cost of government borrowing to finance the deficit,
will average 2% in 2020 and rise gradually over the next decade,
well below the rates forecast in last year's budget. The change
reduces projected net interest costs by $600 billion over the next
decade.
The Department of Housing and Urban Development's budget would
be cut by 15%, though the proposal includes $2.8 billion in
homelessness assistance grants. Mr. Trump has repeatedly said
Democratic-led cities have failed to address homelessness.
The Commerce Department's budget would be reduced by 37% from
2020, but officials said much of that cut can be attributed to the
completion of the census. Foreign aid would be slashed by 21%.
The Centers for Disease Control and Prevention would see its
budget decline 9%, but with the new coronavirus sparking global
panic, $4.3 billion in funding for fighting infectious diseases
would be preserved.
Mr. Trump's plan also calls for a 6.5% funding cut for the
National Institutes of Health, the primary driver of U.S. medical
research. That includes a $430 million cut to the budget of the
National Institute of Allergy and Infectious Diseases, which is
seeking to produce a vaccine that could stop the spread of the
deadly coronavirus and has a parallel program to test therapeutic
products that could fight the outbreak.
Separately, the administration has notified Capitol Hill that it
might reprogram $136 million in funds from fiscal year 2020 to
address the virus, the administration official said, though no
decision has been made on whether the money is needed.
The budget also calls for major changes to the federal student
loan program, capping how much parents could borrow from the
government to cover tuition and ending debt forgiveness for
borrowers who work in the public sector.
Security assistance to Ukraine would remain at current levels
following Mr. Trump's decision last summer to suspend
congressionally approved aid as he pushed the country to
investigate 2020 Democratic presidential candidate Joe Biden, an
episode at the center of the impeachment saga.
The administration also touted in its budget plan its commitment
to two cutting-edge technologies where the U.S. is competing
head-to-head with China -- artificial intelligence and quantum
computing. It said it would double research and development
spending on nondefense artificial intelligence and quantum
information science by 2022.
--Josh Mitchell, Byron Tau, Michelle Hackman, Tom Burton and
John McKinnon contributed to this article.
Write to Kate Davidson at kate.davidson@wsj.com and Andrew
Restuccia at Andrew.Restuccia@wsj.com
(END) Dow Jones Newswires
February 10, 2020 17:23 ET (22:23 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.